I looked at taxes paid by public companies which they typically report in 10-k filings under ‘Income Tax Paid’. Coupled with reported income (‘Profit/Loss’), I hope to discover something interesting in light of the recent events such as tax reform and the ‘Paradise Papers’.
The dataset covers from 2011 to 2016 filings of over 8500 publicly traded companies, of which 1344 had complete reporting of income and tax paid. Each dot in the graph represents a company-year. Note that these are not all U.S. based companies and the tax scheme may vary based on domestic/foreign income etc.
To simplify things let’s assume these are federal taxes only. It looks like a ReLu function, as should be — as these tend to be fairly big companies ($18,333,333 and up) so 35% applies to the majority of them. And of course companies in the loss don’t usually pay taxes.
The one outlier here though, was Federal National Mortgage Association Fannie Mae in 2013. I can’t quite figure out why the unusually low taxes paid by Fannie, even years since they were profitable again. Could be some pretty complicated stuff but here is some more detail for those interested.
Next take a look at tax rates by industry:
I’m surprised there were visible difference between them. Manufacturing and retail actually align with the 35% baseline better than other industries for some reason. The overall tax rate distribution looks like this: